Bulgarian Construction Firms Hesitate to Collect Debts from State

Business | May 24, 2010, Monday // 20:04|  views

Bulgarian Regional Development head Rosen Plevneliev said his ministry is disputing claims by construction firms amounting to BGN 60 M. Photo by BGNES

The Bulgarian state still owes about EUR 600 M to construction firms for completed public procurement projects.

Even though the mechanism for paying money by the state to private contractors through the Bulgarian Development Bank has been set up and is operational, few of them have seek to activate the mechanism in order to get their money, Bulgaria’s Regional Development Minister, Rosen Plevneliev, said as cited by bTV.

Of the total of EUR 600 M owed to construction companies by the state, EUR 240 M are owed by the Regional Development Ministry and its subordinate, the Road Agency.

The Ministry and the Agency have already paid BGN 150 M since the BDB mechanism was set up in April to about 130. About 200 firms, 144 of which are dealing with road infrastructure, have not asked for their money yet. They are supposed to file an application to the Bulgarian Development Bank, and to receive the respective payments after the government confirms their claims.

“However, there are projects such as the notorious “Water Mirror” cascade in Kardzhali where we have not the slightest intention of paying any money to their executers until the Prosecutor’s Office say that everything is legal. The contractors claim BGN 35 M,” explained the Regional Development Minister saying that the state is disputing a total of BGN 60 M claimed by construction companies over suspicions of illegal dealings.

Plevneliev pointed out that under the mechanism established by the Bulgarian government the private companies get paid only 93% of the money they are owed because the Development Bank retains 7% for administrative expenses. He believes that some of the firms might file legal suits against the state because of this arrangement.

According to the Bulgarian Construction Chamber, many of the construction firms are wary of the state procedures and do not trust the mechanism established by the government which is why they are not rushing to making their claims.

At the end of 2009 and the beginning of 2010, the Bulgarian government of the GERB party delayed about BGN 2 B in payments owed to private companies for public procurement projects they executed. The arguments for that were to keep Bulgaria’s budget deficit lower in order to meet the requirements for applying to join the euro zone waiting room, the ERM II, in 2010 – an aspiration which failed to materialize in the spring of 2010; and the claims of the government that they predecessors awarded illegally some of the public procurement projects.

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Tags: Rosen Plevneliev, Regional Development Minister, construction, Bulgarian Development Bank, BDB, public procurement procedure


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